TAMING THE CONTEST BEAST: How to Avoid Contest Catastrophes and Create a Winning Promotion ! CMA’s Regulatory Affairs Conference for Marketers Toronto, Ontario September 22, 2005
Participants Moderator Bill Hearn, Partner, McMillan Binch Mendelsohn LLP Panelists Steven A. Kahansky, Associate General Counsel, Tim Hortons Duncan McCready, Executive Vice President, IC Group Inc. Pierre Savoie, Partner, Legault Joly Thiffault Rick Shea, Director, Marketing & Client Services, Resolve Corporation Vandana Taxali, Advertising and Marketing Lawyer Materials prepared by Jeff Scanlon, McMillan Binch Mendelsohn LLP 2 Taming the Contest Beast – September 22, 2005
AGENDA • Legal Framework in a Nutshell • Interactive Panel Discussion (Contest S cenarios) • Questions 3 Taming the Contest Beast – September 22, 2005
TOOLBOX OF MATERIALS • Contest Law Primer • Appendices 4 Taming the Contest Beast – September 22, 2005
THE STARTING POINT Primary obj ectives are usually to sell products • and services, drive traffic to websites and develop consumer databases Creative is King! • But don’ t give short shrift to legal compliance • 5 Taming the Contest Beast – September 22, 2005
THE STAKES ARE HIGH! Canada: Rogers Video – Win a • Film Fantasy “ whisked off to a secret training � base” where “ contract mercenaries and Green Berets teach you all the skills you’ ll need to survive a 3-day paramilitary covert mission in hostile territory.” United States: Pepsi – “Play for • a Billion Dollars” Sweepstakes 6 Taming the Contest Beast – September 22, 2005
CONTESTS AND THE CRIMINAL CODE The Skill-Testing Question Paragraphs 206(1)(a) to (d) of • the Criminal Code prohibit schemes for disposing of property by “ any mode of chance” S upreme Court of Canada has • clarified that only games of “ pure chance” are prohibited A proper skill-testing question • converts a game of pure chance into a game of mixed chance and skill 7 Taming the Contest Beast – September 22, 2005
CONTESTS AND THE CRIMINAL CODE “No Purchase Necessary” S ection 206(1)(f) of the Criminal Code makes � it an offence to dispose of any goods, wares or merchandise by any game of chance or any game of mixed chance and skill in which the contestant or competitor pays money or other valuable consideration 8 Taming the Contest Beast – September 22, 2005
CONTESTS AND THE CRIMINAL CODE • Penalty � Indictable offence punishable by imprisonment for a term not exceeding two years OR � summary conviction offence punishable by a fine not exceeding $25,000 9 Taming the Contest Beast – September 22, 2005
CONTESTS AND THE COMPETITION ACT • Full Contest Rules: Adequate and Fair Disclosure � Number and approximate value of prize; � Area or areas to which they relate; and � Any fact within the knowledge of the contest sponsor that materially affects chances of winning. 10 Taming the Contest Beast – September 22, 2005
CONTESTS AND THE COMPETITION ACT • Short List Disclosure in Ads: � Packaging � Point-of-S ale � Billboards � TV � Radio � Internet 11 Taming the Contest Beast – September 22, 2005
CONTESTS AND THE COMPETITION ACT • Competition Bureau’ s Program of Binding Written Opinions � $1,000 fee � 2 weeks for “ simple” contests � 6 weeks for “ complex” contests 12 Taming the Contest Beast – September 22, 2005
CONTESTS AND THE COMPETITION ACT Current Penalties • Individuals: � - Up to $50,000 for the first infraction - Up to $100,000 for subsequent infractions Corporations: � - Up to $100,000 for the first infraction - Up to $200,000 for subsequent infractions Publication order/ notice � Proposed Penalties • Individuals – up to $750,000 � Corporations – up to $10 million � Restitution for consumer loss � 13 Taming the Contest Beast – September 22, 2005
CONTESTS AND QUEBEC Additional Requirements • All materials for Quebec residents must be in � French Notice of the contest, together with the applicable � duties, a copy of the contest rules, and the text of any advertisement used in the contest must be filed in advance with the Régie Duties based on the value of prizes available to � Quebec residents must be paid in advance The contest rules must contain certain prescribed � information In certain cases, a security bond with the Régie � may be required 14 Taming the Contest Beast – September 22, 2005
CONTEST SCENARIOS Rick Shea Duncan McCready Vandana Taxali Director, Marketing & Executive Vice-President Advertising and Client Services IC Group Inc. Marketing Lawyer Resolve Corporation Steven A. Kahansky Pierre Savoie Associate General Counsel Partner Tim Hortons Legault Joly Thiffault Moderator Bill Hearn Partner McMillan Binch Mendelshon LLP 15
SCENARIO ONE Cont est sponsor would like t o charge cont est ant s a fee or force a purchase t o ent er it s cont est . 16 Taming the Contest Beast – September 22, 2005
SCENARIO ONE Discussion Points R. v. Balance Group Int ernat ional Trading Lt d. • (Ont. C.A., 2002) “ Crane Game” case � Trial j udge held that crane game was mixed � game of chance and skill Ontario Court of Appeal affirmed � 17 Taming the Contest Beast – September 22, 2005
SCENARIO ONE Discussion Points Test for defining games of mixed chance and skill • set out in R. v . Ross, Banks and Dyson , S CC 1960: “ … when the statute speaks of chance as opposed to skill, it is clear that it contemplates not the unpredictables that may occasionally defeat skill but the systematic resort to chance involved in many games such as the throw of dice, the deal of cards.” (Per Pigeon J.) Remember: paragraph 206(1)(e) of the Criminal Code • applies to games of pure skill! 18 Taming the Contest Beast – September 22, 2005
SCENARIO TWO Cont est sponsor has heard st ories of cont est disast ers and want s t o manage cont est risks prudent ly. 19 Taming the Contest Beast – September 22, 2005
SELECTED CONTEST MIX-UPS • Ultramar (Canada) 2001 20 Taming the Contest Beast – September 22, 2005
SELECTED CONTEST MIX-UPS McDonalds (US and Canada), 2001 • 21 Taming the Contest Beast – September 22, 2005
SCENARIO TWO Discussion Points • Promotional partnership agreements • Contest rules • Other promotion risk management processes and products 22 Taming the Contest Beast – September 22, 2005
SCENARIO THREE Cont est sponsor is designing an online cont est for which all Canadians are eligible t o ent er. There is no “ age of maj orit y” eligibilit y t hreshold. The cont est sponsor is collect ing informat ion from ent rant s such as t heir address, age, profession, shopping habit s and income bracket . The ent ry form provides t hat ent rant s will receive an addit ional ent ry if t hey “ t ell a friend” about t he cont est . 23 Taming the Contest Beast – September 22, 2005
SCENARIO THREE Discussion Points • PIPEDA in force in Ontario since January 1, 2004 • CMA Code of Ethics and S tandards of Practice re Marketing to kids and teens • Quebec’ s An Act Respect ing t he Prot ect ion of Personal Informat ion in t he Privat e S ect or • Depending on structure, “ tell-a-friend” schemes raise consent issues under PIPEDA 24 Taming the Contest Beast – September 22, 2005
SCENARIO FOUR Cont est sponsor is running a cont est t o award a car prize t hat is open t o all Canadians. Ent rant s can part icipat e only by filling out a ballot at part icipat ing st ores locat ed in Ont ario. There is no on- line met hod of ent ry. 25 Taming the Contest Beast – September 22, 2005
SCENARIO FOUR Discussion Points • When must a contest sponsor file with the Régie? • Main requirements for Quebec contests 26 Taming the Contest Beast – September 22, 2005
SCENARIO FIVE Cont est sponsor does not want t o clut t er creat ive in cont est ads wit h legalese and so is reluct ant t o include cont est det ails on packaging or ot her ads. 27 Taming the Contest Beast – September 22, 2005
SCENARIO FIVE Discussion Points Competition Bureau’ s “ S hort List” Disclosure Requirements: • Number and ARV of prizes � Regional Allocation of Prizes � Chances of Winning � S kill-Testing Question � Date Contest Closes � No Purchase Necessary � Where Full Contest Rules Available � S pace permitting, other items may be included for good • reasons other than compliance with Compet it ion Act 28 Taming the Contest Beast – September 22, 2005
29 Radio Short-Form Disclosure Taming the Contest Beast – September 22, 2005
30 Taming the Contest Beast – September 22, 2005 “Roll Up the Rim to Win” Tim Hortons
31 At Pump Esso Contest – Recent Contest Taming the Contest Beast – September 22, 2005 At Roadside
32 Esso Contest – Recent Contest Taming the Contest Beast – September 22, 2005 At Counter
SCENARIO SIX Cont est sponsor want s t o drive t raffic t o it s websit e and so want s t o run a sweepst akes where ent rant s may only ent er on-line. 33 Taming the Contest Beast – September 22, 2005
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